How can you determine if the fixer-upper you’ve got your eyes on is a savvy investment? We’ll get to the bottom of this question today.
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While some fixer-upper properties prove to be wise investments, that’s not the case for all of them. So how can tell if the property you’re interested in is a good deal?
A good place to start is understanding that the average sale price for a move-in ready home is right around $250,000 in our area. Further, the average price for an area home in need of repairs is more like $200,000, but there’s a catch: The work that needs to be done to bring that fixer-upper property up to its potential market value amounts, on average, to a whopping $47,000! That’s even assuming you stay under or at your budget; in many cases, homeowners go well over their budget.
After countless hours and $47,000 worth of work, your home’s updated value is $247,000—still $3,000 shy of the average price. Does that constitute a good deal? It can—especially if you do much of the work yourself.
The lesson here is before you purchase a fixer-upper property, you need to have a concrete budget in mind and know how much you’re spending and what you’re spending it on.
As I mentioned previously, the problem is that many people spend more than their budget allows for. In fact, it’s been shown that when a homeowner goes over budget on fixing up a property, it’s by as much as $25,000 when all is said and done.
The lesson here is before you purchase a fixer-upper property, you need to have a concrete budget in mind and know how much you’re spending and what you’re spending it on, so that you don’t make the same budgeting mistake. As a final note, keep in mind that the buyers who don’t regret going over their budget one bit are usually the ones who have moved into the property themselves.
If you have any questions or you’re thinking of investing in a fixer-upper home, please reach out to the Charlotte Mabry Team. I can assure you we have professionals who have ample experience helping buyers and investors do this very thing and we’ll be happy to help!
